Do Hedge Funds Love Coupa Software Incorporated (COUP)?

Is Coupa Software Incorporated (NASDAQ:COUP) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Coupa Software Incorporated (NASDAQ:COUP) investors should pay attention to a decrease in hedge fund sentiment in recent months. Coupa Software Incorporated (NASDAQ:COUP) was in 52 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 66. There were 54 hedge funds in our database with COUP positions at the end of the second quarter. Our calculations also showed that COUP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to take a peek at the fresh hedge fund action surrounding Coupa Software Incorporated (NASDAQ:COUP).

Chase Coleman of Tiger Global

Do Hedge Funds Think COUP Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in COUP over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Coupa Software Incorporated (NASDAQ:COUP) was held by Lone Pine Capital, which reported holding $1000.8 million worth of stock at the end of September. It was followed by Viking Global with a $858.7 million position. Other investors bullish on the company included Alkeon Capital Management, Tiger Global Management LLC, and Select Equity Group. In terms of the portfolio weights assigned to each position Andar Capital allocated the biggest weight to Coupa Software Incorporated (NASDAQ:COUP), around 8.04% of its 13F portfolio. Tybourne Capital Management is also relatively very bullish on the stock, setting aside 5.54 percent of its 13F equity portfolio to COUP.

Due to the fact that Coupa Software Incorporated (NASDAQ:COUP) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of funds who sold off their positions entirely in the third quarter. Interestingly, Spencer M. Waxman’s Shannon River Fund Management sold off the largest investment of the 750 funds tracked by Insider Monkey, totaling about $52.3 million in stock. Steve Zheng’s fund, Deepcurrents Investment Group, also sold off its stock, about $31.4 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Coupa Software Incorporated (NASDAQ:COUP). These stocks are GoodRx Holdings, Inc. (NASDAQ:GDRX), 10x Genomics, Inc. (NASDAQ:TXG), MarketAxess Holdings Inc. (NASDAQ:MKTX), DLocal Limited (NASDAQ:DLO), Repligen Corporation (NASDAQ:RGEN), Olaplex Holdings Inc. (NASDAQ:OLPX), and WPP Plc (NYSE:WPP). This group of stocks’ market caps are closest to COUP’s market cap.

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As you can see these stocks had an average of 27.7 hedge funds with bullish positions and the average amount invested in these stocks was $780 million. That figure was $4542 million in COUP’s case. Olaplex Holdings Inc. (NASDAQ:OLPX) is the most popular stock in this table. On the other hand WPP Plc (NYSE:WPP) is the least popular one with only 5 bullish hedge fund positions. Coupa Software Incorporated (NASDAQ:COUP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COUP is 76.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately COUP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on COUP were disappointed as the stock returned -10.3% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.